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Dec 31, 2023
ServiceNow Q4 2023 Earnings Report
ServiceNow's Q4 2023 earnings exceeded expectations, driven by strong subscription revenue growth and profitability.
Key Takeaways
ServiceNow reported strong Q4 2023 results, exceeding guidance across all topline growth and profitability metrics. Subscription revenues grew by 27% year-over-year, and the company raised its 2024 subscription revenues and operating margin outlook.
ServiceNow's Q4 2023 subscription revenues reached $2,365 million, a 27% year-over-year increase.
Total revenues for Q4 2023 amounted to $2,437 million, reflecting a 26% year-over-year growth.
Current remaining performance obligations (cRPO) stood at $8.60 billion, up 24% year-over-year.
The company recorded 168 transactions over $1 million in net new ACV, a 33% year-over-year increase.
ServiceNow
ServiceNow
ServiceNow Revenue by Segment
Revenue by Segment
Professional services Revenue
CapyFin.com Forward Guidance
ServiceNow provided guidance for Q1 2024 and full-year 2024, including subscription revenue targets and operating margin expectations.
Positive Outlook
- Q1 2024 subscription revenues are expected to be $2.510 - $2.515 billion, representing 24% - 24.5% year-over-year growth.
- Full-year 2024 subscription revenues are projected to be $10.555 - $10.575 billion, indicating 21.5% - 22% year-over-year growth.
- Q1 2024 operating margin is anticipated to be 29%.
- Full-year 2024 subscription gross profit margin is expected to be 84.5%.
- Full-year 2024 free cash flow margin is projected to be 31%.
Challenges Ahead
- Q1 2024 cRPO growth will be negatively impacted by 1.5 points due to the strength of the U.S. Federal business in Q3 2023.
- Q2 2024 cRPO growth will be negatively impacted by 2 points due to the strength of the U.S. Federal business in Q3 2023.
- The guidance is based on the 31-day average of foreign exchange rates for December 2023.
- Weighted-average shares used to compute diluted net income per share for full year 2024 is expected to be 208 million.
- Future performance is subject to risks and uncertainties, including cyber-security events, evolving privacy laws, and global economic conditions.